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THE MINISTRY OF PLANNING AND INVESTMENT

CIRCULAR No.01-BHK/DN OF JANUARY 29, 1997 OF THE MINISTRY OF PLANNING AND INVESTMENT GUIDING THE IMPLEMENTATION OF DECREE No.56-CP OF OCTOBER 2, 1996 OF THE GOVERNMENT ON THE PUBLIC UTILITY STATE ENTERPRISES

In furtherance of Decree No.56-CP of October 2, 1996 of the Government on the Public Utility State Enterprises; after consultation with the Central Steering Committee for Renovation of Enterprises, the Ministry of Planning and Investment provides detailed guidance on the determination of the publicutility State enterprises, and the annual plans assigned or production orders placed by the State to the public utility State enterprises, as follows:

I. DETERMINING THE PUBLIC UTILITY STATE ENTERPRISES

A public utility State enterprise is an independent enterprise or an independent cost-profit accounting member of a State corporation directly performing national defense and security tasks or producing goods or providing public services according to the State policies, State plans or production orders within the price levels, price brackets or charges prescribed by the State and operating not mainly for profits.

The above-said public utility State enterprises include:

1- The enterprises directly performing national defense and security tasks:

- State enterprises engaged in the manufacture and/or repair of weapons, military equipment and facilities for special use in national defense and security, which have already been re-established or newly established under Decree No.388-HDBT and already ratified in the general plan for reorganization and rearrangement of State enterprises under Directive No.500-TTg of August 25, 1995 of the Prime Minister and the technology and main tasks of which consist in manufacturing and repairing weapons and military equipment and facilities for special use in national defense and security.

- State enterprises established to directly perform national defense and security tasks: conducting direct export and/or import of weapons, military supplies, materials and equipment for special use in national defense and security; sweeping and deactivating bombs and mines; erecting special-use structures; printing, publishing and distributing defense and security books and newspapers; other enterprises which are assigned special tasks of maintaining national defense capability.

- State enterprises established in important strategic areas such as border regions, islands and the Central Highlands to perform the main State-assigned tasks of maintaining national defense and socio-political security in their respective areas in combination with production and business activities in various branches and with various occupations in accordance with provisions of law.

2- State enterprises engaged in the manufacture of products, the provision of public services with at least 70 % of their turnovers derived from production and the provision of services in the following domains:

- Urban communication and public utility works: mass transit, environmental sanitation and ecological environment protection, management of parks, plants, zoos, public lighting, water supply and drainage, funeral services... in urban areas.

- Management, exploitation, renovation and maintenance of the infrastructure system: the national railways, roads, water ways, ports, maritime insurance, piloting and/or towing ships into or out of sea ports and airports and flight control.

- Technical test of overland and waterway transport means.

- Control, supervision and distribution of radio frequencies.

- Exploitation and protection of irrigation works.

- Production of prototype breeds of plants, domestic animals: varieties of food crops, fruit trees, industrial plants, strains of forest trees, breeds of cattle, poultry, aquatic species, including spermatogenesis and artificial insemination of animals.

- Publication and distribution of text books and political materials.

- Production and distribution of newsreels, documentary and scientific films, TV films and films for children.

- Production of goods, provision of services according to the State social policies: production and supply of kitchen salt, film projection and provision of other goods and services under Government prescriptions in service of the mountain, highland and border regions and islands: production and supply of anti-epidemic medicines for human beings, plants and domestic animals; production of goods and provision of services for the disabled.

The turnover from the production of goods and provision of public services shall be calculated on the basis of the actual turnover of the enterprises in the two latest years.

II. DECISIONS ON THE PUBLIC UTILITY STATE ENTERPRISES

1- With regard to State enterprises already ratified by the Prime Minister in the general plan for reorganization and rearrangement of State enterprises in accordance with Directive No.500-TTg of August 25, 1995 of the Prime Minister:

Basing themselves on the criteria defined in Articles 1 and 2 of Decree No.56-CP and implementation guidances in this Circular, the Ministers, the Heads of ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the People�s Committees of the provinces and cities directly under the Central Government shall consider and decide which among the State enterprises currently operating in their respective branches and localities are public utility enterprises.

With regard to State enterprises defined in Point 2, Section I of this Circular which have already been defined as public utility enterprises, if after two consecutive years, their turnover from either the production of goods and/or provision of public services fails to reach 70% of the total turnover, the agency that has decided the establishment of such enterprises shall reconsider and stop recognizing them as public-utility enterprises.

In cases where the State enterprises operating in the domains defined in Point 2, Section I of this Circular have not yet been classified as public utility enterprises but their turnover from the production of goods and provision of public services makes up 70% of the total turnover for two consecutive years, they shall be reconsidered and classified as public utility enterprises by the agencies that decided their establishments.

The agencies that issue decisions on the State public utility enterprises shall submit the lists of the public utility enterprises within their respective branches or localities to the Ministry of Planning and Investment and the Ministry of Finance.

2- Establishment of new public utility State enterprises:

Basing on the public-utility requirements, tasks and capability of the State public utility enterprises currently operating in their respective branches, areas and localities, the Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the People�s Committees of the provinces and cities directly under the Central Government, the Presidents of the People�s Committees of districts and provincial towns, the Managing Boards of the State corporations shall propose the establishment of new public utility State enterprises within their branches, localities or corporations.

The order and procedures for the establishment of the public utility State enterprises shall comply with the provisions of Decree No.50-CP of August 28, 1996 of the Government and the documents guiding the implementation of this Decree.

III. ASSIGNING PLANS TO OR PLACING PRODUCTION ORDERS WITH THE PUBLIC UTILITY STATE ENTERPRISES

1- Assigning plans or placing production orders:

- The public utility State enterprises shall base themselves on the functions, tasks and operating domains defined in the decisions on their establishment to draw up specific plans for public utility activities and other activities (if any) and submit them to the agencies that have issued decisions on their establishment and the financial agencies of the same level.

- The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the People�s Committees of the provinces and cities directly under the Central Government shall assign annual plans to or place production orders with the public utility State enterprises within their branches, localities with the following criteria:

+ The quantity and quality of products and public services.

+ The time and places of delivering and receiving products and public services.

+ The payment unit prices of products and public services.

+ The unit price for allowance and subsidy to each product or public service set by the competent level.

+ The draft budget revenues and expenditures (within the scope of the already approved annual draft budgets of the Ministries or localities).

-Annually, the agencies that assign plans or place production orders shall examine the quantity, quality of products, public services fulfilled by the public utility State enterprises to be paid for by the State.

2- The assignment of plans to and placing of production orders with the public utility State enterprises in a number of domains:

a/ With regard to enterprises directly performing national defense and security tasks, the Minister of Defense and the Minister of the Interior shall assign quantitative and qualitative quotas of products and services to the national defense and security enterprises.

b/ Enterprises operating in strategic areas are considered special public utility enterprises. For the performance of the task of securing national defense and security in the area when natural calamity or enemy sabotage occurs, the State shall assign the quantitative and qualitative quotas of the permanent workforce at the enterprises to meet the requirement of combat readiness. The enterprises shall base themselves on the labor quotas and plans assigned by the State to draw up plans for the use of their labor forces in terms of quantity and quality to turn out products and provide services for the national economy and ensure the livehood of laborers.

The public-utility enterprises mentioned in points a and b above shall be entitled to privileges according to the regulations and guidances of the Ministry of Finance.

c/ With regard to other public utility State enterprises, the State shall assign plans or place production orders for products and/or public-utility services with turnover accounting for 70 or more percent of the total turnover of the enterprises. In case where the turnover from the State-assigned products and/or services fails to reach 70 per cent of the total turnover, the enterprises shall still be entitled to privileges corresponding to the quantity and quality of products and services paid for by the State.

In addition to the tasks or production orders assigned by the State, the enterprises can also produce other kinds of products and/or provide other kinds of services so as to make full use of the production capacity, but must meet the following requirements:

- Getting written approval from the agency that has decided their establishment.

- Not affecting the performance of the public-utility tasks or production orders assigned by the State.

- Making supplementary registration of trades and occupations in accordance with current regulations.

- Accounting separately the business part.

- Discharging the tax obligation with respect to the extra business activities, as prescribed by law.

d/ The State enterprises conducting business activities when assigned plans or orders for production or provision of public-utility goods or services by the Prime Minister, the Ministers, the Heads of the ministerial-level agencies and agencies attached to the Government, the general directors of Corporations, the Presidents of the People�s Committees of the provinces and cities directly under the Central Government, shall be entitled to the regime of allowances and price subsidies and other preferential regimes of the State corresponding to such part of products or public-utility services.

IV. IMPLEMENTATION PROVISION

This Circular takes effect from the date of its signing. The previous regulations which are contrary to this Circular are now annulled.

If any problem arises in the course of implementation, the agencies and enterprises shall have to promptly report to the Ministry of Planning and Investment for consideration and additional guidance.

The Minister of Planning and Investment

TRAN XUAN GIA